Plan ahead: ease the cashflow burden, minimise business tax

Plan ahead and save tax

No doubt a lot of businesses have experienced revenue downturns over the last few months. It makes for an opportune time to look at minimising tax, not only for 2020, but also easing the cashflow burden of it for FY 2021.

Small businesses can access a range of tax concessions from the ATO. To qualify as a “Small Business Entity”, your business must have an aggregated turnover (your annual turnover plus the annual turnover of any business connected with you) of less than $10 million, and be operating a business for all or part of the 2020 year.

Instant deduction for asset purchases

The recent Federal Government COVID-19 assistance packages expanded deductions for asset purchases, plus new accelerated depreciation laws. If your business has a turnover under $500 million, assets purchased up to the amount of $150,000 (exc. GST) will be immediately deductible.

You should buy these assets and use them or have them ready for use before 30 June 2020. Talk to us today about your options.

Pay employee superannuation now

To claim a tax deduction in the 2020 financial year, you need to ensure that your employee superannuation payments are received by the super fund or the Small Business Superannuation Clearing House (SBSCH) by 30 June 2020.

You should avoid making last minute superannuation payments as processing delays may cause them to be received after year-end

Write-off bad debts

Review your Trade Debtors listing and write-off all bad debts BEFORE 30 June 2020. Prepare a management meeting document listing each bad debt, as evidence that these amounts were written off prior to year-end and enter these into your accounting system before 30 June 2020.

Small business concessions for prepayments

“Small Business Concession” taxpayers can make prepayments (up to 12 months) on expenses (e.g. loan interest, rent, subscriptions) BEFORE 30 June 2020 and obtain a full tax deduction in the 2020 financial year.

Trustee resolutions

Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2020 for all Discretionary (“Family”) Trusts. Not having an appropriate resolution may result in the trustee being taxed at penalty rates on the net income of the trust.

Year-end stocktake

If applicable, prepare a detailed stock take and/or work in progress listing as at 30 June 2020. Review your listing and write-off any obsolete or worthless stock items.

Investment property depreciation

If you own a rental property and haven’t already done so, arrange for the preparation of a Property Depreciation Report to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property.

Important information

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from your financial adviser and seek tax advice. Information is current at the date of issue and may change.

Talk to us today before the 30 June 2020 deadline for assistance to reduce your tax!